Insurance Code: Government must intervene as insurance industry fails its final self-regulation test

The Australian Consumers Insurance Lobby has called on the Federal Government to take control of the General Insurance Code of Practice, arguing the Insurance Council of Australia's latest redraft demonstrates the industry is incapable of placing professional standards, accountability and public confidence ahead of its own commercial interests.

The call follows comments by Assistant Treasurer and Minister for Financial Services Daniel Mulino, who has indicated he wants the General Insurance Code of Practice made contractually enforceable and subject to oversight by the Australian Securities and Investments Commission (ASIC).

Dr Mulino is uniquely placed to assess the industry's performance. As Chair of the Parliamentary Inquiry into insurers' responses to the 2022 floods, he oversaw extensive evidence exposing serious failures in claims handling, communication, delays, expert reports, temporary accommodation and consumer treatment across the insurance sector.

Despite that inquiry, despite the industry's own independent review and despite more than 120 recommendations for reform, the Insurance Council has produced a redraft that weakens existing commitments, ignores many key recommendations and further demonstrates why self-regulation is failing Australians.

"The Insurance Council has once again prioritised commercial interests ahead of professional standards." said ACIL spokesperson Tyrone Shandiman.

"After years of inquiries, reviews and public criticism, the industry was handed a clear roadmap for reform. Instead, it has chosen to water down existing protections and leave many of the most significant recommendations unaddressed. This is no longer a drafting issue. It is a governance failure.  The Insurance Council cannot continue acting as the industry's peak lobby group while simultaneously claiming to be an independent guardian of consumer protections. Every major review of the industry has identified serious shortcomings. Every review has recommended stronger protections. Yet every time meaningful reform is proposed, we see commitments diluted, delayed or abandoned."

ACIL supports making the General Insurance Code contractually enforceable but says enforceability alone is meaningless if the standards themselves remain inadequate. "A weak code that is contractually enforceable is still a weak code."

The organisation is calling on the Federal Government to remove responsibility for the Code from the Insurance Council and establish an independently administered framework overseen by ASIC.

"Self-regulation is a privilege, not a right. The industry's latest redraft demonstrates that it has failed its final opportunity to prove it can regulate itself in the public interest."

"We strongly support ASIC oversight of the Code. However, the time has come to go further. ASIC should administer the Code approval and governance process itself, rather than leaving responsibility in the hands of the very industry it is supposed to regulate."

"Dr Mulino's willingness to consider intervention should be welcomed. The evidence from the Parliamentary Flood Inquiry, the Independent Code Review and now this latest redraft all point to the same conclusion.  Government intervention is no longer a threat. It is becoming a necessity."